In a significant development, the Supreme Court on Thursday ruled that states possess the legislative authority to impose taxes on lands bearing mines and minerals under the Constitution. The verdict, delivered by a nine-judge Constitution bench, saw a majority decision of 8:1. Chief Justice DY Chandrachud, speaking for himself and seven other judges on the bench, clarified that the royalty payable on minerals does not constitute a tax. The CJI, while reading the operative part of the majority verdict, stated that Parliament does not have the power to tax mineral rights under Entry 50 of List II of the Constitution.
SC affirms states’ taxing authority
This specific entry relates to taxes on mineral rights, but it is subject to any limitations imposed by Parliament through laws concerning mineral development. In a notable aspect of the judgment, the Supreme Court overturned its own 1989 decision made by a seven-judge Constitution bench, which had previously held that royalty is a tax. The recent ruling categorically declares that the 1989 verdict was incorrect in its interpretation.
